Major & Minor Pairs
A detailed look at the most widely traded currency pairs — how they are quoted, what drives their movement, and what makes each pair distinct.
The Seven Major Currency Pairs
Major pairs all include the US dollar. They account for the largest share of daily forex volume and typically offer the tightest spreads and highest liquidity.
The most traded currency pair in the world, representing the eurozone and the United States. EUR/USD is highly sensitive to ECB and Federal Reserve policy decisions, inflation data, and economic growth figures from both regions.
Known as "Cable", GBP/USD is one of the oldest currency pairs. It reflects the economic relationship between the UK and US. This pair is known for wider daily ranges and higher volatility than EUR/USD, making it popular with short-term traders.
USD/JPY is closely tied to US Treasury yields and Bank of Japan monetary policy. The Japanese yen is considered a safe-haven currency, meaning it often strengthens during periods of global market uncertainty.
The Australian dollar is considered a commodity currency, closely linked to commodity prices — particularly iron ore and coal exports. AUD/USD also reflects sentiment toward Chinese economic growth, as China is Australia's largest trading partner.
USD/CHF pairs the US dollar with the Swiss franc — another traditional safe-haven currency. During risk-off periods, demand for CHF tends to rise, pushing USD/CHF lower. Swiss National Bank policy and EU stability are key drivers.
Known as "The Loonie", USD/CAD is heavily influenced by crude oil prices given Canada's role as a major oil exporter. Bank of Canada decisions and the broader US-Canada trade relationship also play significant roles in its movement.
The New Zealand dollar — often called the "Kiwi" — is driven by agricultural commodity prices and RBNZ monetary policy. NZD/USD tends to move in tandem with AUD/USD due to geographic and economic similarities between Australia and New Zealand.
How Currency Pairs Are Priced
Every currency pair has a bid price and an ask price. The bid is the price at which buyers are willing to purchase, and the ask is the price at which sellers are willing to sell. The difference between these two prices is the spread.
For EUR/USD at 1.0850/1.0852, the bid is 1.0850 and the ask is 1.0852. The spread is 2 pips. When you open a buy trade, you enter at the ask price; when you close it, you exit at the bid. Understanding this dynamic is essential for accurately calculating trade costs.
Pairs Without the US Dollar
Minor pairs, also known as cross pairs, are currency pairs that do not include the US dollar. They are derived from major pairs — for example, EUR/GBP can be calculated from EUR/USD and GBP/USD. Cross pairs typically have wider spreads and lower liquidity than major pairs.
Despite lower volume, cross pairs can offer meaningful opportunities — particularly when two economies are diverging in their monetary policy cycles. EUR/GBP, for example, closely tracks the relative performance of the eurozone and UK economies.
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